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Indian equity benchmarks traded under pressure for the third consecutive session and lost nearly a percent on Friday, on the back of unabated selling pressure in select index heavyweights. Markets made a gap-down opening, as the Centre extended the nationwide Covid-19 containment measures till November 30 as there has been localised spread of the virus in a few states and the disease continues to be a public health challenge in the country. However, key gauges recovered most of initial losses in late morning deals, taking support from the city-based thinktank NCAER stating that most of the sectors are on their way to reach pre-pandemic levels and surpass them. The National Council for Applied Economic Research (NCAER) said the economic news has been favourable on balance, on account of better than projected fiscal outcomes, a rebound in most high-frequency indicators, and another impetus to policy reform, including a hitherto inconceivable privatisation of Air India.

However, markets failed to hold recovery and fell sharply in afternoon deals, even as SBI Research’s report stating that the Reserve Bank of India (RBI) should let the rupee rally against the dollar to contain imported inflation coming in mainly from crude prices and help push exports, as the current account risks from rising oil price can be contained at 1.4 per cent of GDP. Market participants also paid no heed towards report that the Ministry of Finance has released the balance of Rs 44,000 crore to the states and union territories (UTs) as a loan to compensate for the Goods and Services Tax (GST) shortfall, taking the total amount to Rs 1.59 lakh crore in 2021-22. This release of funds as back-to-back loans is in addition to the bi-monthly GST compensation being given out of cess collection. 

On the global front, Asian markets ended mostly lower on Friday as traders reacted to disappointing earnings tech giants Apple and Amazon as well as policy announcements from the Bank of Canada and the Bank of Japan. Traders are also concerned that high inflation may force global central banks to tighten monetary policy earlier than thought. European markets were trading lower as flash data from Eurostat showed that Eurozone inflation accelerated sharply to the highest since 2008 on higher energy prices. Inflation rose to 4.1 percent in October from 3.4 percent in September. This was also faster than the economists' forecast of 3.7 percent. However, preliminary flash estimate from Eurostat showed the euro area economy grew at a slightly faster pace in the third quarter. Gross domestic product grew 2.2 percent sequentially after expanding 2.1 percent in the second quarter. Economists had forecast the quarterly growth to ease to 2 percent. Back home, on the sectoral front, gold and jewelry industry stocks were in focus as the World Gold Council said India’s gold demand has seen a 47 per cent year-on-year jump in the July-September quarter to 139.1 tonnes, following strong rebound in economic activity and recovering consumer demand.

Finally, the BSE Sensex declined 677.77 points or 1.13% to 59,306.93 and the CNX Nifty was down by 185.60 points or 1.04% to 17,671.65.         

The BSE Sensex touched high and low of 60,132.81 and 59,089.37, respectively and there were 11 stocks advancing against 19 stocks declining on the index. 

The broader indices ended mixed; the BSE Mid cap index rose 0.16%, while Small cap index was down by 0.38%.

The top gaining sectoral indices on the BSE were Basic Materials up by 0.55%, Realty up by 0.53%, Auto up by 0.35%, Healthcare up by 0.35% and Consumer Durables up by 0.31%, while Energy down by 1.90%, IT down by 1.60%, TECK down by 1.35%, Bankex down by 1.12% and Finance down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 2.61%, Dr. Reddy's Lab up by 2.12%, Maruti Suzuki up by 1.49%, Tata Steel up by 1.34% and Titan Company up by 0.66%. On the flip side, Tech Mahindra down by 3.53%, NTPC down by 3.05%, Indusind Bank down by 2.62%, Kotak Mahindra Bank down by 2.53% and Larsen & Toubro down by 2.51% were the top losers.

Meanwhile, the city-based think-tank -- the National Council for Applied Economic Research (NCAER) in its monthly review of the economy painted a rosy picture of the economy and has said that most of the sectors are on their way to reach pre-pandemic levels and surpass them. It said ‘The economic news has been favourable on balance, on account of better than projected fiscal outcomes, a rebound in most high-frequency indicators, and another impetus to policy reform, including a hitherto inconceivable privatisation of Air India’. It added that the economic activity has continued to normalise with increase in vaccinations and decline in the incidence of COVID infections.

The report said ‘With the economy expected to grow at 9.5 per cent (RBI) this year, most sectors seem to be on their way to reach the pre-pandemic level and then grow beyond those levels’. While the agriculture sector, which remained mostly undented by COVID, has continued to grow at its long-term average, the manufacturing sector seemed to be on target to recoup most of the loss that it had suffered during the pandemic. It said being the most contact-intensive, the service sector was the hardest hit by the pandemic, and is understandably the slowest to recover.

It further said the domestic policy imperatives include putting the fiscal policy on a more sustainable path, being watchful of the impact of the COVID-related economic stress on the asset quality of banks and non-banking financial institutions (NBFIs), better understanding and alleviating the constraints to private investment, and further leveraging the buoyancy in the global trade outlook. It added ‘Even as the domestic economic environment has been stabilising, the global economic environment seems to be facing specific headwinds, which may have implications for the Indian economy’. The report flags rising inflation on account of the generous fiscal stimulus in some of the advanced economies such as the US, supply chain bottlenecks, and rising energy prices; an impending tightening of monetary policy in advanced economies; and the seemingly irrational exuberance in the capital markets.

The CNX Nifty traded in a range of 17,915.85 and 17,613.10 and there were 18 stocks advancing against 32 stocks declining on the index.
The top gainers on Nifty were Ultratech Cement up by 2.69%, UPL up by 2.14%, Cipla up by 2.05%, Shree Cement up by 1.44% and Dr. Reddy's Lab up by 1.44%.

On the flip side, Tech Mahindra down by 3.48%, NTPC down by 3.09%, Indusind Bank down by 2.87%, Kotak Mahindra Bank down by 2.69% and Reliance Industries down by 2.26% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 38.12 points or 0.53% to 7,211.35, France’s CAC decreased 48.54 points or 0.71% to 6,755.68 and Germany’s DAX decreased 184.71 points or 1.18% to 15,511.62.

Asian markets ended mostly lower on Friday tracking slowdown worries in the pace of US economic growth in the third quarter, although Wall Street posted a record gain overnight with encouraging jobless claims reports. Seoul shares declined for a third straight day following the release of weaker-than-projected earnings by major tech firms in the United States. However, Japanese shares rose on optimism around domestic corporate outlook even as investors are in cautious mood ahead of the country's general election on Sunday. Chinese shares gained as property developer Evergrande group has reportedly made an overdue interest payment to offshore bond holders less than two weeks before a grace period expired.

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